Preparing for the Future: International Evidence on Carbon Management Strategy and Firm Value

• In Event: Research with an Impact on Scholarship: Reporting, Valuation, and Markets

Abstract

By utilising Carbon Disclosure Project’s (CDP) Information Survey, we develop a Carbon Management Strategy (CMS) index for firms and document that CMS index positively affects firm value in cross-country settings. Our finding is robust to alternative measure of firm value, and controlling for firm, industry and country-specific factors. We also find consistent results for each component of the CMS index. While the quantity of emissions reduces firm value; however, higher CMS index alter the negative impacts of emissions on firm value. An increase (decrease) in CMS scores decreases (increase) carbon emission. Firms with higher CMS index are likely to engage in a higher level of environmental disclosures and are more likely to identify potential climate change related opportunities that would have significant positive consequences on firm’s operations. Overall, our findings establish the importance of an effective CMS to create firm value and reduce carbon footprints to ensure environmental sustainability.

Authors

• Md Al Mamun, La Trobe University

• Mahfuja Malik, Sacred Heart University

• Kathy Dhanda, Sacred Heart University